More important today than ever before, international assignments are key to achieving business goals and developing talent. During my time as an in-house mobility practitioner I saw first-hand the myriad of complex issues that surround international assignments – legal residency and work requirements, travel, healthcare and education for the assignee’s family, the maze of tax laws of both the destination and home nations – the list goes on.
In addition, most international assignments include compensation and services that do not usually apply to local employees. These additional elements are required to ensure candidates are both willing and productive in their new position and location. Because of these variables, international assignments incur a significant investment and most end up with a unique cost profile. This makes budgeting, tracking, and analyzing the benefits of mobility decisions difficult for most organizations to assess. So how does a global mobility team manage these concerns and weigh the different scenarios while still providing value to the business?
We can just send them on assignment… right?
The process used to send employees on assignment are varied from destination to destination, project to project, and obviously assignment to assignment. Location, duration, scope of project, family size and services required need to be considered when planning for an assignment. During planning, global mobility professionals deal with relocation companies, immigration offices, tax advisors and many other organizations. These interactions accumulate services fees and other expenses throughout the process, which adds to the overall cost of the assignment. However, all too often there is little to no advance costs projections available, obscuring the understanding of the eventual cost of the assignment being considered by the business.
Assignment cost… a rough guess will (not) do!
It is a common fact that a single three year international assignment can cost over one million dollars. However, being aware that an assignment is going to cost 5 million instead of 2 million may be a fundamental tipping point in the decision-making process.
Today, many mobility teams do not have the right tools to predict the cost of an assignment or relocation. Accumulating cost information on a proposed scenario is complicated and time consuming when you consider the sheer number of variables and providers involved. In addition, the tax calculations needed are not available in a way which is economical in terms of both time and cost.
As a result, a business is left with an unreliable estimate of the proposed liability. This estimate is inevitably vastly different from the actual cost of the original proposal – in effect rendering such a projection useless to the business and a waste of precious time and resources. What mobility teams need is a fast, easy, and accurate scenario planning tool.
Scenario planning… so how do we do this right?
Being able to project costs for the business is a vital role for Global Mobility. A cost estimate should be detailed, structured per costs types, and include not only the on-assignment costs but pre-assignment and post-assignment costs as well. This can be achieved by direct integration to the vendors (immigration, relocation, tax, etc.) so results from specific scenario queries can be returned in seconds. A reliable and effective cost estimate should have all the tax information for the assignment or relocation included, so all the tax liabilities are clear from the start of the process.
Fundamental elements in a useful Scenario Planner or Cost Estimate…
- Comprehensive– All the information needed is present: including tax calculations, policies, allowances, and vendor costs are all factored in.
- Relevant– Specific costs relating to this scenario should be reflected, not generic templates used.
- Accessible– Generated instantly and displayed in a logical and easy to read format with simple distribution and export to excel.
- Concise– The details are important, but having a summary which gives the overview is essential.
Reliable and effective scenario planning should be comprehensive, relevant, accessible, and concise. They should aid the business in their decision-making process resulting is minimal surprises as an assignment or relocation progresses. Businesses need mobility teams to look at an assignment from all angles to determine who is the right candidate and where is the right location.
Topia can help you produce accurate, fast, and effective cost estimates using our Topia Plan solution. We support a growing list of 104 destinations in terms of tax logic, including home, host, hypothetical, social, and other tax considerations.
If you would like to learn more, watch our on-demand webinar.
By Dimitri Vigushin